CMS Proposed Exception for Gainsharing and Quality Incentive Programs
As this writer discussed in more detail in a recent presentation, the law governing hospital programs to align physician incentives to improve quality and reduce costs continues to evolve. Most recently, the Centers for Medicare and Medicaid Services (“CMS”) proposed a new exception under the Stark Law for “incentive payment” programs to improve quality and “shared savings” programs in the calendar year 2009 Medicare Physician Fee Schedule proposed rule.
CMS acknowledges that the new exception it proposes is narrow, and indicates that while it seeks to provide flexibility, new exceptions must be crafted in a way that avoids any risk of program or patient abuse. CMS specifically notes concerns that the programs not be used to disguise payments for referrals or compromise quality in order to increase profits. As a result, the proposed regulation includes 16 numbered paragraphs with conditions for satisfying the exception, and additional requirements discussed in the preamble without regulatory text.
Generally, CMS’ proposal addresses the same elements that have been considered in OIG advisory opinions to be critical in avoiding abuse in gainsharing programs – transparency, quality controls, and safeguards against payments for referrals. The criteria proposed by CMS address the design of the incentive or cost sharing program, impose limitations and conditions on payments made under the program, and specify criteria for the terms of the arrangement between the hospital and physicians. Some of the requirements include review by an independent medical reviewer prior to commencement of the program and annually during the term of the program (which may not exceed 3 years), provision of written notice to affected patients describing the program, limitations on the manner in which payments are calculated, and limitations on the physicians that may receive payments, including a requirement that only physicians on the medical staff at the commencement of the program may participate.
CMS solicits comments in a variety of areas, and hospitals have an opportunity to present their views on ways to provide further flexibility under the regulations. The comment period ends August 29, 2008.
Significantly, in issuing this proposed regulation, CMS acknowledges that aligned incentives between hospitals and physicians can be beneficial in enhancing quality and saving costs. While it is an indication of increasing governmental acceptance of hospital-physician collaboration in cost saving and quality initiatives, this proposal addresses only the Stark Law. A primary legal impediment to gainsharing and other cost savings programs is the civil monetary penalty statute, which the OIG has interpreted to prohibit “any hospital incentive plan that encourages physicians through payments to reduce or limit clinical services directly or indirectly.” Hopefully, further guidance on application of the civil monetary penalty statute will be forthcoming.
OIG Approves Gainsharing Program for Ortho and Spine
AUGUST 14, 2008
The OIG has approved the first orthopedic and spine gainsharing project.
No details have been released on the participating hospitals or the particular procedures and technologies that will be covered in the project. Additionally, no financial terms have been publicized, though the Goodroe press release says that most arrangements allow participating physicians to be paid as much as 50% of the savings generated under the program. According to Goodroe, up to $75 million in potential savings has been identified in the existing programs, so these benefits could be significant. A 2006 survey found that most physicians felt that gainsharing was an effective way to align financial incentives for hospitals and physicians, though they were divided on what constitutes gainsharing and whether it should be disclosed to patients.
In her guest blog for HealthpointCapital, Goodroe Healthcare Solutions founder Joane Goodroe commented, "Gainsharing is first about assuring quality of care for patients and secondly about increasing efficiency." Industry groups such as MDMA and AdvaMed have taken issue with these objectives, suggesting that gainsharing may reduce the quality of patient care, slow development of new technology and discriminate against smaller manufacturers.
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I've present Gainsharing to MGMA Annual, BONES, MGMA FMS and MSO Societies.
The docs have to approach the hospital - the hospital is not going to be very aggressive about sharing their savings.
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Marshall Maglothin MHA MBA
President, Blue Oak Consulting, LLC
COO, Inpatient Specialists, P.A.
Fairfax, VA / Rockville, MD
mmaglothin@cox.net